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Tentative Agreement on Additional Funding for PPP

Tentative Agreement on Additional Funding for PPP

Late Sunday night, lawmakers and the White House came to a tentative agreement on additional funding for the Paycheck Protection Program (PPP) in what is being informally referred to as Stimulus 3.5. The agreement totals more than $400 billion and includes $300 billion for the PPP, $60 for a separate emergency loan program at the Small Business Administration (SBA), and an additional $100 billion for hospitals and coronavirus testing. The agreement arrives after more than a week of intense negotiations. Senate Republicans had originally asked for $250 billion for the PPP, but were unable to secure Democrat support as they demanded an equal amount for hospitals and state and local governments. While the new agreement does not include any additional funds for state and local governments, it has been purportedly moved to negotiations over a 4th relief package.

The SBA shut down applications for the PPP last week after it exhausted its funds as demand soared for the program in the three weeks since the program was created. The additional funding in Stimulus 3.5 will allow the SBA to start accepting applications again once the legislation is passed by Congress. Experts still urge small businesses interested in the program to begin working with their banks now in anticipation of the new funding rather than waiting until the funding is actually appropriated, as demand for the program is expected to remain high.

Strategic Petroleum Preserve

Last week, the White House reported that the President is considering paying oil companies to keep crude in the ground. As part of the program, the Energy Department would buy up to 365 million barrels of oil reserves as part of its authority to store up to $1 billion barrels in the Strategic Petroleum Reserve (SPR). Companies that participate in the program would be required to produce the oil in the future for storage in the SPR. Unfortunately, such a program would cost roughly $7 billion and the White House and Senate Republicans already failed to get $3 billion for purchases for the SPR over Democrat objections.

Senate Energy and Natural Resources Chair Lisa Murkowski (R-AK) and her colleague Sen. Dan Sullivan (R-AK) introduced legislation this week to purchase $3 billion of U.S.-produced crude oil for the SPR. Sen. John Hoeven (R-ND) and Reps. Lizzie Fletcher (D-TX) and Michael Burgess (R-TX) have joined them in the effort. While symbolic of these lawmakers support for oil and gas companies during this crisis, it is unlikely to pass as a standalone bill. The best opportunity for legislation authorizing crude purchases by the SPR is still in a bipartisan relief package, but that will require Democrat lawmakers do not object, which they so far have done.